Monthly Archives: October 2004

Why innovators innovate

Yesterday, over at Café Hayek, Don Boudreaux noted the work of the Yale economist William Nordhaus and his finding that:

innovators capture a mere 2.2% of the total “surplus” from innovation. (The total surplus of innovation is, roughly speaking, the total value to society of innovation above the cost of producing innovations.)

Boudreaux notes:

“The smallness of this figure is astounding. If it is anywhere close to being an accurate estimate, the implication is that “society” pays a paltry $2.20 for every $100 worth of welfare it enjoys from innovating activities.”

He asks: “Why do innovators work so cheaply?” But his answers, excessive optimism and the illusory lure of big winnings, don’t seem to me to tell the whole story.

Doesn’t this turn on the difference between intrinsic and extrinsic rewards? It is fun to make stuff up. More to the point, making stuff up is its own reward.

Anthropologists spend a lot of time talking to people who think in the well-worn groves supplied by culture. George Bernard Shaw said: “Most people would rather die than think. Most do.” But every so often, anthropologists run across people who are mad keen to beat their way out of the received assumptions and the defining ideas for their culture.

These are the innovators. Innovators love innovating. They look at the “road closed” signs posted by culture and drive right through them. They like to crawl into the Platonic cave and say, ‘that can’t be right.”

Maybe, it’s the sheer excitement of going “where no man has gone before.” Maybe it’s a willful, contrarian, anarchic wish to defy convention. Maybe it’s the sheer pleasure of building a bridge as we go, in real time, with no net, with the clear knowledge that we have no knowledge. This is intellectual weightlessness. It’s an opportunity, for a brief moment, to escape the gravitational pull of culture. For a moment, we exist “out”…of culture, convention, the body, and our minds.

For innovators, this moment is its own reward. I figure this is why Xerox captured so little of the value they created. The egg heads were running the shop, and they were already very nicely compensated. They were the first ones to ‘think” a Graphical User Interface. Let someone else, at Apple and then still more belatedly, at Microsoft, figure out the details. Let some one else take it to market. And, yes, let someone else reap the “rewards.” The innovator has already taken his or her cut.

I have a test for my proposition. (This is rare for an anthropologist, so let me pause for a moment of self congratulation.) Let us canvas the winners of the Nobel prize and give them this choice. They must choose between the moment of their “innovation” and all the credit that came to them as a result of the innovation: riches, prestige and the Nobel prize itself. The additional condition: if they take the Nobel prize, they will be prevented from engaging in innovative thought ever again. We will put a Denver boot on their brain.

I am prepared to bet virtually every winner would turn down the prize for the chance to think again. For someone who has tasted the joys of making stuff up, anything else would be a torment and the end of the great joy of life. Most innovators would innovate for room and board. They are thrilled, and a little surprised, to discover that a university or a corporation is prepared actually to pay them.

“2.2% of the total surplus of the innovation? Great. Put it over there. Got a moment? See, I have this idea…”

References

Boudreaux’s post here

Fox, Richard G. 1991. For a Nearly New Cultural History. in Recapturing Anthropology. editor Richard G. Fox, 93-113. Santa Fe: School of American Research Press.

With a hat tip to Tyler Cowen for the lead here

Monarchical Express

Ever feel like an aristocrat? It’s deliberate.

The consumer revolution was, and is, driven by the democratization of privilege. Goods and services once reserved for the elite are routinely made available to the middle class.

Every man has his “castle.” We eat food that 200 years ago was the definition of aristocrat privilege. Our clothing is better than most nobs could have hoped for. We have access to music and literature that once existed only in private libraries and exalted drawing rooms.

Most of this democratization has been driven by technology, to be sure. That thing we call a ‘telephone” accomplishes a task that once required a private secretary scribbling furiously. That thing we call a “kitchen” once required a “downstairs” staff of 10. (I recently heard someone call a dish washing machine a robot. I prefer to think of it as a servant.)

We’ve been stubborn on certain points. We continue to insist on driving our own cars, not a very aristocratic thing to do. But then this is what a taxi is for. All we need to do in a crowded urban centre is to raise our hands, and suddenly a cab appears. Surrender a few coins, and the cab goes away.

And the process continues. While I was doing research for IBM on the business traveler, I fell to thinking about how the princes of New York City travel. They’re the ones who maybe seen striding into gleaming towers without encumbrance. We know them in Manhattan by how little they carry. In this case, the status object is no object at all.

I thought of this as I watched people schlepping their luggage through airports in Boston, Chicago and Denver. Beasts of burden! Kay Lemon, my colleague, and I fell to thinking. Surely, there is a solution to this sort of thing. We wondered, “why don’t people surrender their bags to Fed Ex the night before they travel, and have it waiting for them when they arrive?”

It was too good an idea not to occur to someone else. Pam, my fiancée, spotted an article on the Peninsula Beverly Hills hotel. Apparently the PBH routinely acce[ts guest luggage from Fed Ex. Once the guest has left the hotel, the PBH cleans, presses and repacks everything and sends it back. (Pam’s idea: “Perhaps airlines should reduce rates for passengers traveling without luggage.”) Suddenly, the schlepping is over. The security line at the airport is a breeze. And the airline no longer has a chance to set our suitcase to Argentina.

This is one of those business revolutions in the making. Now that we have an almost perfect distribution system in the form of Fed Ex, why not relieve the airlines of something they do badly? Indeed, why is anyone leaving the home or office with anything larger than a purse or a brief case? At one of the cross roads of culture and commerce is a steady stream of innovations moving from on high to the rest of us. Thank you, Monarchical Express.

References

McKendrick, Neil, John Brewer, and J. H. Plumb. 1982. The Birth of A Consumer Society: The Commercialization of Eighteenth-Century England. Bloomington: Indiana University Press.

a note for the “language watch” file

metaphor.bmp

It’s customary these days to hear people in meetings talk about “bucketing” things. As the board room conversation goes forward, participants start “bucketing” this and “bucketing” that. They are making order of the conversation, but it feels often as if the roof is merely leaking.

It is not a pretty metaphor, and it doesn’t particularly flatter the people in the room. If “buckets” is the best we can do, perhaps this is not the most adroit conceptual activity, and perhaps the corporation deserves better.

Indeed, just about everyone I know makes fun of the bucketing turn of phrase. But we all use it anyhow. It occurred to me the other day that this phrase might be a symptom of the nature of discourse in the corporate world. In the anthropological manner, I began to wonder whether the phrase did not reveal something more fundamental about the culture in place.

Let’s assume, and for anyone who has spent any time in a boardroom, this is an easy assumption, that corporate discourse is a newly complicated thing. Under the influence of complexity theory and other ideas designed to give us a leg up on the new dynamism of the marketplace, we are encouraged to contemplate many possibilities from many points of view. Even the simplest problem admits of several, radically different, treatments. The boardroom task is to think its way out of this complexity to a plausible action plan.

The bucket metaphor has two advantages. The first is to let us honor the first rule of complexity theory: that we must work with heterogeneous problem sets. We must honor the complexity of the world by being very careful not to oversimplify it. “Buckets” is a good metaphor because it says, in effect, “we believe all these things go together, but we are not insisted how. We leave that for later.”

Furthermore, buckets allows us to proceed even when we don’t have full consensus. I am not talking about the political tensions that have always haunted corporate discourse. I’m talking about the multiplicity of points of view that a complex approach to things inevitably encourages, indeed demands. The “buckets” approach says, “we are not saying which point of view is privileged by this categorization. We are not insisting on one approach. By bucketing these considerations, we are agreeing to disagree at a later time.”

It’s not a pretty phrase, and it’s not an elegant one, but “buckets” does suggest that something might be happening to the conceptual architecture with which we address the problems of the corporate world as it takes on the new dynamism of the marketplace. “Buckets” are, by metaphoric implication, messy, uncertain categories. But there are within these limits stable ones. They allow us to say “We the people believe these considerations are somehow related and belong together.”

It’s possible that this slightly risible metaphor is in fact a harbinger of the new intellectual order and difficulty of discourse in a complicated and dynamic world.

Bush’s secret “code word”

President Bush used the phrase “hard work” 11 times in his debate with Senator Kerry last night.

It worked, I think, as a code word, a way of reaching out to a very particular, but very large, group of voters.

Most Americans don’t work for a living. They risk for a living. If they run a small business, they are especially vulnerable. If they are members of Free Agent Nation, they must be very, very responsive to a changing set of circumstances. Even if they belong to a corporation, large or small, they are subject to the vicissitudes of the marketplace. As the corporation confronts new dynamism, they can be downsized, rationalized or otherwise dumped.

The Democratic camp, many of them, may work for a living, but they do not risk for a living. They hold protected positions in unions, civil services, and universities. The world may rise and fall with dynamism, but they ride not the large and small boats of enterprise, but a larger, more secure, platform of occupational privilege. (The “owning” vs. “working” class distinction is still a salient distinction. But the real measure of privilege may be how protected we are from dynamic effects of the marketplace.)

There are lots of ways to protect ourselves from risk: education, intelligence, foresight, planning. But these are only the necessary conditions of managing risk. The sufficient condition is hard work. Those who risk for a living get up every morning, gird loins, grit teeth, and get down to business. They work really, really hard.

(Let me say, parenthetically, that I’ve done a lot of ethnographic work in this area. Over the years I have interviewed hundreds of Americans for thousands of hours of contact. I have worked as a consultant for many people in the corporate world. I am frequently wowed by how demanding, how time scarce, how stressed, and how effortful most of these lives are. All without a net.)

Bush used “hard work” 11 times last night perhaps because this phrase has special resonance for those who risk for a living. The phrase allowed the President to say, “Listen, what I am doing in the White House is what you do every day.” It allowed him to say, “We are both working hard because that is the way we respond to the risk that defines our lives and our worlds.”

“Hard work” was perhaps a code word. Those who live by risk got it immediately. Those who do not heard it as everyday language. Clever President Bush. He managed to sneak a rallying cry into the most ordinary little phrase. It allowed him to claim common purpose with Republicans, real and potential.

Dan Pink says that Free Agent Nation has a population of 33 million and notes, “Even this […] figure means that free agents easily outnumber all manufacturing workers and all government workers—and may be the largest single cluster of workers in the economy.” If we add to this the people who work in the corporate world without the protection of union contracts or tenure, the number of people who “risk for a living” must be very high.

This is a natural Republican constituency. These are people who believe, or must at least act as if they believe, in the necessity of hard work. Whether the Republican party has found a way to recruit this group remains to be seen. The notion of the “ownership society” is apparently one such attempt. It is possible that President Bush’s “hard work” phrase represents the beginnings of a second, more comprehensive, strategy.

References

Stats from Dan Pink’s Free Agent webpage here